ill bet anything that the welds on the transfer gear in your dd broke and the secondary gear slipped. when this happens it destroys your planetary. i work at a cat shop and have seen a dozen of these. if its not under warranty, you can still replace just those parts. its about $450 for the transfer gear/planetary assembly. just pull your dd, drain, remove the top case half and shift fork, and the planetary/ transfer gear will pull out of the reverse housing. flip it over and pull the bearing on the back side. then you can take the transfer gear out of the planetary. most likely you will see broken welds on the transfer gear and broken teeth on the planetary. if so, check all your bearings (especially the output shaft bearing) , and drop a new assembly in. another option is replacing your dd with a 2009 version. you will not have reverse but the transfer gear is splined instead of welded and much stronger. i would tell you to put a 2009 transfer gear in but those parts are still unavailable. if a dealer tells you that you have to replace the entire drive, call another dealer. let me know. good luck!